New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1887-10-21
BUSINESS SYMPTOMS.
FAILURES AND THEIR MEANING.

SOLVENT AND INsoIvrNT BUSINESS COMPARED
CAUSE FOR PRUDENCE But NOT FOR PANIC.
To ne Editor Of me tribune
SIR: What do those failures meant The reports oil the
Mercantile Agency show that there have been O'soo
already this year. than IN either Of the four COM
plee years ending with 1882 and that the liabilities OF
firms failing have also been unusually beavy-for nine
months than in either OF the four years or pros
pery and IN the Las. three months at rate not known
In any year 1879 Are these returns ominousi Is
close hand period OF great disassr2 He
read. figures rightly will that they bear no
gloomy interpretation. and yet bring warning which
may well be needed.
The failures without other facts to compare them with
are herogy phcs without Interpreter Some compare
tho number of failures in 1897 with the number IN 1873
ignoring tho fact that fourteen years the number OF
firms In business has doubled. That, OF course
10 trying read without eyes. Others com
pare the amount OF liabilities one year with
the amount another year, forgetting that
the volume OF business of all kinds in 1881 more
than twice great as in 1873. That is trying to read
with the eyes shut Others st compare the amount OF
liabilities with the numoer Of firms failing, which shows
the ratio of Liabilities firm. but ignores both the mum
Der of solvent traders and the volume OF solvent bust
The extent aud meaning Of insolvency can only he
determined by comparing it with solvent business. OF
1000 traders how many fam OF payments which
ought TO he sde. what part not made and so
stitute the liabilities OF bsnkrupts The whole number
Of firms reported by the Agency which records the
failures supplies basis for the first comparison. The
second he made only by using the payments
through the clearing houses, which automatically re-
I'd the volume OF business not lie observed at all
times with the same accuracy iullness. Ten years
or twenty Yeas ago clearing houses we're less used
than they now, and the proportion OF exchanges
70 the asgre gate Of business smaller Yet the
thus obtained Is approx correct, and
nearly accurate than other. IT is found upon
% re
the volume OF all business correctly than the
OF changes at part Of the Cities because the settle
ments for cities where there formerly were clearing
houses then IN large part effected through the
financial centre; tho establishment OF a poiat OF
changes thus lessons tho OF drafts and checks
which important for settlement
In 1875 fifteen clearing houses recorded settlements
amounting S3l $40 900 oO0 of which IS s65 100000
were paid at fourteen cities outside OF New York The
fteen recorded settlements in 1856
amounting to SIG77 003O no. witch Sl3. O9j 900 600
fourteen cities side OF New York.
while fourteen clearing had established
since 1873 which recorded Ia 1856 Transactions mt
10 ~ 900 little than per 81 the
There be- doubt At these fourteen
cities also business TRANSACTED So and that
OF the OF business there represents the
transfer of Transactions of settlements from older
cities Unfortunately record has been preserved OF
EXCHANGES prior to 1873. the aggregate at all cities in
that ant oach subsequent year Is shown In millions In
the following Table. with tue aggregate Of liabilities OF
firms failing since 1869. also ia millions. In tho Same
table appears The OF failures year. with
whole number OF firms reported business the begin
ming Of tue year